Allegations surface against Chesapeake CEO
OKLAHOMA CITY — It appears there is more trouble for Aubrey McClendon and Chesapeake Energy.
The energy giant’s stock plunged Wednesday; down 12 percent in the first hour of trading.
Investors reacted to disappointing news that the company lost more than $71 million in the first quarter.
The stock trouble comes as allegations are surfacing of possible price-fixing by the former chairman of the board.
Some are alleging McClendon was manipulating gas prices to make money on the side in a hedge fund, worth about $200 million, that traded in natural gas.
Energy experts said the fear is that his trades were powered by his knowledge of Chesapeake and other natural gas companies and his control over supply and demand.
Oklahoma City attorney David Slane said, “If he manipulated prices, everyone who turns on natural gas in their house to heat it, every school, every church, that price will be passed on to the consumer.”
The situation at Chesapeake caught the attention of Rolling Stone Contributing Editor Jeff Goodell. He said, “There’s a lot of complicated financial engineering going on behind this company and I basically came to the conclusion that it’s a lot like a house of cards. You’re not really sure what’s holding this whole thing up. This is about this sort of high level corporate financial shenanigans and it’s not clear where this is going to lead.”
Experts said the next natural step will most likely be a federal investigation to see if there was any criminal activity.
Slane said, “I think that if the federal probe shows there was any price-fixing or price manipulation, there’s a potential for federal charges.”